Correlation Between Power Solution and Raja Ferry

Can any of the company-specific risk be diversified away by investing in both Power Solution and Raja Ferry at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Power Solution and Raja Ferry into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Power Solution Technologies and Raja Ferry Port, you can compare the effects of market volatilities on Power Solution and Raja Ferry and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Power Solution with a short position of Raja Ferry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Solution and Raja Ferry.

Diversification Opportunities for Power Solution and Raja Ferry

0.85

Correlation Coefficient

Power Solution  Raja Ferry

Very poor diversification

The 3 months correlation between Power and Raja is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Power Solution Technologies and Raja Ferry Port in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raja Ferry Port and Power Solution is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Power Solution Technologies are associated (or correlated) with Raja Ferry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raja Ferry Port has no effect on the direction of Power Solution i.e., Power Solution and Raja Ferry go up and down completely randomly.

Pair Corralation between Power Solution and Raja Ferry

Assuming the 90 days trading horizon Power Solution Technologies is expected to under-perform the Raja Ferry. In addition to that, Power Solution is 1.56 times more volatile than Raja Ferry Port. It trades about -0.18 of its total potential returns per unit of risk. Raja Ferry Port is currently generating about -0.12 per unit of volatility. If you would invest  122.00  in Raja Ferry Port on September 15, 2024 and sell it today you would lose (15.00) from holding Raja Ferry Port or give up 12.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Power Solution Technologies  vs.  Raja Ferry Port

Power Solution Techn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Solution Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Raja Ferry Port

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raja Ferry Port has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Power Solution and Raja Ferry

The main advantage of trading using opposite Power Solution and Raja Ferry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Solution position performs unexpectedly, Raja Ferry can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Raja Ferry will offset losses from the drop in Raja Ferry's long position.

The idea behind Power Solution Technologies and Raja Ferry Port pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.